SONAE has admitted liability for a huge fire which ripped through its Kirkby site in 2011.

The Portugese company, which stopped production at Kirkby last year, is facing a class action compensation claim from 10,000 people who say they suffered as a result of the emissions from the plant during the blaze.

Birkenhead-based lawyers Camps, who are leading the massive litigation against the woodchip factory, said the admission was a “significant milestone” on the road to securing pay-outs for Knowsley residents who claim their health suffered as a result of the fire.

Lead solicitor Anthony Wilson said: “The extensive fire at the plant last year burned for eight days, releasing toxins which thousands of local people are claiming had an adverse impact on their health.

“Sonae has formally filed its defence through the High Court.

“The defendant admitted liability, subject to causation which means each claimant has to show that they suffered personal injury and/or nuisance as a result of the fire.”

The blaze, in which some employees and firefighters were injured, has led to what could become the largest class action of its kind in UK legal history.

Mr Wilson, who has led an 18-month investigation into the health concerns of residents, said his practice interviewed more than 4,500 claimants face-to-face to ensure every client represented had a genuine case.

He added: “The residents we have spoken to come from a range of age-groups and backgrounds, from very young people to the elderly.

“We have even interviewed parents of babies who were born around the time of the fire and have suffered significant problems due to the acrid smoke that was released into the community at the time.

“We researched the circumstances of every client, accessed medical records and drew on the independent expertise of engineers, chemists, environmental experts, toxicologists and doctors.

“It is impossible to say how much compensation could be paid out by Sonae, because every single case has to be assessed on an individual basis.”

More than 200 jobs were lost last September when production ceased at the Moss Lane site, which had been plagued with problems following the deaths of two workers in 2010.

The blaze in June 2011 left the plant badly damaged and in need of a new multi-million pound flaker hall.

When it finally closed after months of uncertainty, managing director Nigel Graham blamed “political and planning problems” for the decision after a series of clashes with Knowsley Council.

A spokesperson from Sonae Industria said: "Regarding the admission of breach of duty related with the fire in June 2011, the question of whether anybody has suffered an injury, which is recognised in law and is entitled to compensation, will be the subject to further detailed investigation by the court.”